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In this episode, Keila explores alternatives to discounting that allow you to showcase the unique value you provide as a service-based business. Discover strategies like bundling services, communicating your differentiators, and tailoring your pricing and messaging to your ideal client. Understand how to confidently command premium prices by building value-based relationships and enhancing the customer experience.
Connect with Keila!
LinkedIn - https://www.linkedin.com/in/keilahilltrawick
Website - http://www.hellokeila.com
RESOURCES:
- (00:00) - This is Build to Enough
- (01:46) - Exploring the Long-Term Impacts of Discounting
- (03:01) - The Hidden Costs of Discounting
- (03:07) - Case Study: The JCPenney Pricing Strategy Mishap
- (07:08) - Alternatives to Discounting: Adding Value
- (09:23) - Communicating Your Value and Pricing Strategy
- (14:53) - Building Value-Based Relationships Over Discounts
- (16:54) - Conclusion and Resources for Effective Pricing
Connect with Keila!
LinkedIn - https://www.linkedin.com/in/keilahilltrawick
Website - http://www.hellokeila.com
RESOURCES:
Learn more about Little Fish’s suite of services and sign up for our newsletter at www.littlefishaccounting.com
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Creators & Guests
What is Build to Enough ?
Little Fish Accounting presents Build To Enough. The pursuit of endless growth and scaling can leave entrepreneurs feeling burned out and unfulfilled. This podcast explores how to build sustainable, purpose-driven businesses that align with your lifestyle and values, rather than defined by rapid expansion alone. On this show, we’ll reframe definitions of success, provide strategies for structuring companies around desired lifestyles, and share stories of entrepreneurs finding deeper fulfillment by focusing on “enough.” Join us as we discuss moving off the hamster wheel and building businesses with balance and meaning.
There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.
Keila Hill-Trawick: Hello. You're listening to Build to Enough, a podcast for entrepreneurs who want to scale at their own pace. I'm your host, Keyla Hill Traywick, and I'll be your chief storyteller and cheerleader in a world that glorifies endless expansion, we're tuning out the noise and discussing the beauty of enough. Each episode will dive into inspiring stories, practical insights, and strategies to cultivate sustainable success on your [00:00:30] own terms. So whether you're a solopreneur, small business owner, or aspiring entrepreneur, get ready for a refreshing take on the entrepreneurial journey. This is build to enough. When you feel like you're not making the sales that you were expecting to. The first place that many business owners go to is to discount. Which is tempting, right? There's an expectation that the reason that you're not paying for my service, or the reason that you're not hiring me, has to be because my price is too high. [00:01:00] And if I could lower that investment level, I would then be able to bring on more clients. It's also easy to feel like that should be your next step when you are competing with rivals. So when there are other people who are peers or who are offering the same type of service as you, and you start looking at their pricing and what you would consider, quote, industry standard, it can be incredibly alluring to go in and say, oh, if I brought my price down, then I could [00:01:30] achieve the success that they're getting.
Keila Hill-Trawick: The thing is, when you discount because you want to increase sales volume or attract new customers, or even meet short term revenue goals, right, you want to get more money in its long term, implications are often overlooked. And so today I want to talk about how you need to be strategic and careful when you're thinking about lowering prices or offering a discount. Let's dig in. All right. So we already talked about some of the temptations. And I understand [00:02:00] you are competing with other businesses for clients right. A client can only hire one accountant or one photographer or one graphic designer. And if you want to be the one that they hire, you may feel like the way to get there is with lower prices. You're also trying to attract new customers. So when you're trying to stand out against the noise that is the internet, it can be easy to say, I will again compete on price. You will choose me because when you are out there looking for somebody to hire, I have the lowest [00:02:30] or most affordable price. And then finally we talked about this quickly earlier, but boosting short term revenue. So these one offs or discounts or I just need to get you in the door and you wouldn't even come to me if I didn't lower my price. And so even though long term this should cost more, at least you will pay me today. At the time it feels like you are increasing sales volume, right? You're like, I have more clients and more money and I'm going to be able to take such good care of my clients.
Keila Hill-Trawick: But there are some [00:03:00] hidden costs. So the first thing is diminished brand perception. I'm going to give you an example. Let's talk about JC Penney. So JC Penney y'all remember JC Penney right. Yes. You remember JC Penney JC Penney had this strategy in 2012. And they were like you know what. We're going to stop doing all these sales and promotions. Uh we're just going to give you everyday low prices. Think kind of the Walmart method. Right. The problem is JC Penney's customers were used to finding [00:03:30] the deals. The thrill of the hunt of like how can I get this for cheaper? Oh, I saved this much money. I was gonna, you know, this is the suggested retail price and I'm getting it for this much. They felt like they were winning. When every day it's a low price. You take that away. As a result, JC Penney's revenue declines significantly. And now you've got a bunch of their stores closing. It didn't matter that they turned around and said, Sike, we shouldn't have done that. We're going to reverse that and go back to the old [00:04:00] way, because people had already realized that this new way wasn't working for them, and they had dropped out of shopping at JC Penney. So what did that mean? It means that the brand perception of what people thought that they were getting from that store also went down.
Keila Hill-Trawick: And that's not what you want for your business either. You're a small professional service provider that is out here doing work quality work with excellence and with efficiencies. And when you make your [00:04:30] price too low, you diminish the value of all that you're putting into it. You're also potentially decreasing your profit margins. So yeah, it seems like you're getting a short term revenue boost. But as we've talked about before, revenue isn't profit. Even when you decrease how much you charge for things, you have the same expenses. And so now you are making less, but you are paying for the same things going out, which means that what you have left over at the end is significantly smaller. Usually when you have discounted [00:05:00] prices, it can affect the business's cost structure and profitability ratios. And they seem small, right? You're like, oh, I only took off 5% or oh, I only took off $100. But you do that over multiple clients. That's a huge hit to your bottom line and you may not be prepared for that when you get all of the money in. And then look at your books at the end of the month and realize that you yeah, you made more revenue, but you don't have anything left over. Finally, you've got a devaluation of products or services. So [00:05:30] when customers get used to discounted prices, it can be really hard to raise it up to your normal pricing level when they want to come back to you, and for a lot.
Keila Hill-Trawick: Of small professional service providers. Recurring clients and referrals are really your bread and butter. Aside from ads and all these other ways that you can market, a lot of your repeat business is what makes you money. And if you are constantly discounting prices, a couple of things [00:06:00] can happen one, the original value or your real price seems inflated, and so they may be reluctant to pay the full price when you finally get rid of those discounts. Two it can be a challenge to regain trust and credibility. So now you've been low all this time. Those people that are referring you to other people are also saying that you are low. When you finally get to a place where you're like, I don't have to do this anymore, I should charge you my regular price. They can feel duped. It can feel like, well, why did you tell [00:06:30] me that it cost this much if it actually cost this much? So be aware of that. The more you have excessive discounts, the harder it is for you to ever get back to your regular price. And the more often clients and potential clients will start expecting a discount. So I know that you and I both are aware of brands that are so consistently discounted that we will never pay full price.
Keila Hill-Trawick: We'll just wait for the next sale or the next email. And if that is the case and you are in that position, think [00:07:00] about the fact that potential clients are doing the same thing. They are waiting for you to have a sale again, with no intention of ever paying your real price. So what are some alternatives to discounting? You may be thinking to yourself, all right, yeah, that'd be great. But the problem that I had at the beginning was that I was not making enough money. And now you're saying don't charge less for it. So the first one is to add value through additional services or perks. Now I say this with with an asterisk. I do not want us burning ourselves out to give [00:07:30] more, more, more. But I do think that there are ways in which we are one already doing additional work that we are not calling out. Um, you may be providing advisory services if you are providing things like location services, if you're a photographer or additional calls, some of that is already built in and you're not telling the client. And that's our potential clients and that's why they think it costs so much. But the other thing is, are there ads that you could make that are not heavy lifts that in addition to [00:08:00] helping the client see the value, also potentially makes your job of working with them a bit easier? The next thing is that you may want to bundle products or services.
Keila Hill-Trawick: This is something that I've seen work incredibly well, and it allows a client to not have to choose from a buffet and instead say, you seem to know exactly what I would be looking for. Thank you for organizing that in a way that I can get everything that I need in one package. It sounds counterintuitive, but providing that value through a bundle of services has led to a lot more [00:08:30] profitability for a lot of service providers. Rather than letting people pick what they want just off of a, like I said, buffet menu. And the reason is because when they are adding things one by one, clients can feel like, ah, well, I'm only going to spend this much. And so I will take A and C and E, but you know, based on the clients that you've worked with, based on the sheer number of projects and proposals that you've done, what most people are geared to needing based on their needs. And so [00:09:00] it could be helpful for you on sales calls to say, hey, based on what you're saying, it looks like you need this, this and this. In that case, it may feel like it's discounting to bundle them together, but I'm sure that there are some economies of scale, some efficiencies that make it so that because you're doing it together, you're not actually losing anything.
Keila Hill-Trawick: Again, your expenses are the same, but you're not starting and stopping on different levels. You also want to communicate the value to customers and differentiate your business based on quality, [00:09:30] expertise and unique offerings. There's something different about what you do. You wouldn't bring this up as a business if you didn't think that you could offer something to the marketplace that didn't already exist. Hype that up. Let people know that the reason that you cost what you cost is because you have this experience, because they can see a visual representation of what you offer, whether through testimonials or actual like photos and videos and all of that stuff. You also want to make sure that you [00:10:00] are telling clients what you do and how. You can't expect them to just know how much you quote should cost. Again, you are in technical competition with other service providers, but what you do in your lane is different and you need to be clear about that. You also want to make sure that when you are making reductions for any reason, whether it's an actual discount or a bundle discount that you are really clear up front about what this cost and why they're [00:10:30] getting it. Again, sometimes you may offer something like, hey, I usually only do this for this many photos, right? I always go to photographers, I don't. But I do this package for this many photos and you can add on this many which would normally be x amount, but I will do it for this amount.
Keila Hill-Trawick: Is it discounting? Technically yes, but I think that's a whole lot different than this whole package is going to cost you less. It's an add on that isn't as expensive as if they had bought it by themselves. So [00:11:00] remember, when I'm talking about discounting, I'm thinking about like your services overall, keep in mind that there may be add ons or additional pieces that you can add to their services that may be less than they would have been if they were just standalones, but still gives you the full value. And again, it should work to your benefit. It should be because I can offer you another ten photos because I was already taking them. And it doesn't take me extra work, not just for the benefit of the client. I've got some tips for how you can price [00:11:30] products and services so that you reflect their true value. And if you have premium pricing, it actually justifies it. So we already talked about identifying the unique features and advantages that set you apart, but I can't say that enough. Whatever you do, you need to put your stamp on it and show people why they should choose you. Not in a I'm better than anyone else, but really in a I'm better for you, for what you're looking for. That means you've got to do some competitive research. You've [00:12:00] got to figure out what others in your field are doing, so that you have a really good sense of how you stand out against them.
Keila Hill-Trawick: Next, make sure that you're tailoring your pricing and messaging to effectively communicate the value prop right. You want to make sure that when you are talking to people about what you do differently, you are speaking specifically to your ideal customer. Now, I know we hear that a lot in marketing, right? But it's true. One of the things that we had to do at Little Fish is start thinking about like, who do we serve best and only [00:12:30] talk to them? So instead of saying we do accounting for small businesses, what we actually do is accounting and tax for micro businesses with small teams, all of them being professional service providers. Why is that important? Because if you are a store, if you're an e-commerce site that sells widgets, we're not going to be the best accountant for you. And there is a premium being placed on the fact that if you are in our target audience, we know how to work with you. We work with people like you all the time, [00:13:00] and we've got background and expertise because of that that we're able to use to justify our pricing. We've also created packages and tiers that cater to different customer needs. Everybody can't come in at the highest price. And if you want clients at different levels, you need to be aware of that so that you can create a level of service that would align with what they need.
Keila Hill-Trawick: Here's the thing too. If you only have one and it's high, be there. Don't create lower level services that you will resent or not want [00:13:30] to do or not be your best at, simply to get that short term revenue. Instead, make sure that you're messaging your copy. The places that you show up are supporting clients coming in at the level that you want to do the work. At the end of the day, when you don't, it can be a very uncomfortable experience. I have been there, I have done it. It is not fun. And now you have also brought in new clients to a service that you don't want to continue, which could lead to some awkward conversations down the line. Finally, [00:14:00] make sure that you have clear and compelling pricing messages wherever you can. Let people know up front what the investment looks like, whether it's a starting price, an average price, or a range. Now you will see all over the internet arguments about whether or not you should put your pricing up front. And I am not here to tell you whether or not you should or shouldn't. What I am saying is, in whatever ways that looks like, whether it's your website or your pricing guide or your materials that get [00:14:30] sent to people for a call, give people a sense of what they're walking into.
Keila Hill-Trawick: If you're not going to, you want to be really, really, really clear about what you do so that they have a sense that this is going to be a premium priced service and are not surprised by the number that you throw out on the call. The last thing I'll say is that you really want to work on building value based relationships. It's important that you build strong relationships with clients rather than relying on discounts to attract them. It might bring them in, [00:15:00] but it won't necessarily make them stay, especially if eventually you want to go back to your regular price instead. What are you doing for them? Why is it important that they work with you? What do you make sure that they get from you so that they can go back to the business that they want to do, and that they want to run and not have to worry about the thing that you're taking off their plates. Focus on enhancing the customer experience. You want to deliver exceptional service and cultivate loyalty through personalized interactions, and [00:15:30] not just the dollar sign. So I'll give you an example. One of the things that little fish did is as the years went by in our year round tax service, we realized that we were adding a bunch of additional value and not charging for it. And some things came, some things went away. But once we solidified some extra things that would be included in the service that weren't there before, I'm thinking of things like reasonable compensation analysis, accountable plans, additional tax planning software that allowed [00:16:00] us to give even more value to our tax planning calls, unstuck sessions, so that people could talk to somebody in between their planning sessions if they needed to for quick bite size.
Keila Hill-Trawick: I just have a question real fast and want to get in that wasn't included in the original version of the service. And so when we did start including those, we went back to really reestablish how much it should cost on an annual basis. A lot of that was because we are committed to improving the customer experience. When [00:16:30] we have the right amount of clients paying the right amount, I could hire more people so that we could take more phone calls so that we were more available to shorten our response time from 48 hours to 24 hours. All of that came from this idea that as long as we wanted our clients to have a VIP experience, we needed to take just enough clients to be able to provide that. All right. So closing all of this relates to your idea of building to enough. Because when your team [00:17:00] is small, when you have figured out what your line is in terms of how many people will work with you, whether that's on your team or with clients, and how much you actually need to make. Discounting becomes even more of a thing that you don't want to do.
Keila Hill-Trawick: You really want to make sure that you are looking overall at your capacity, at your pricing, and at your messaging so that that can do the heavy lift for you. And you don't have to rely on discounting. If you're wondering where to start, we've got a resource library [00:17:30] and we've got all kinds of templates and guides in there that can help to inform pricing strategy, help you get a sense of what your expenses look like so that you know how much you need to charge in order to cover everything, and give you some ideas of the other types of things that you might run into that help you to even more. So, see how much money needs to come in for you to be living off of the business that you created. If that all sounds good to you, sign up for the Resource Library at our website. We'll make sure that the link is in the show [00:18:00] notes. Thank you so much for tuning in today. Thank you for tuning in to another episode of Build to Enough. If you enjoyed today's episode, don't forget to subscribe, rate and share the love with your fellow entrepreneur friends, and make sure to sign up for the Build to Enough newsletter. The link is in the show notes. Stay tuned for more episodes as we continue to redefine success one intentional step at a time.